Monthly Archives: January 2012

RMDs – If you turned 70-1/2 in 2011…

RMDs – always a messy topic – are usually a year-end problem. RMDs are Required Minimum Distributions which have to be taken from various retirement accounts once you reach a certain age.  If you were given the opportunity to make tax-deferred savings over your lifetime, it’s time to start paying the piper.  And for most […]

Choosing a financial planner: 5 red flags A nice article from CBS’s MoneyWatch site. Summary – Watch out for the following things (notes which follow the bullet points are my own): Variable Annuity pitch – sometimes these may be appropriate, but certainly they are not something anyone should suggest at a first meeting.  If they are suitable, they require a detailed […]

(Almost) Everyone can file their federal individual income taxes electronically for free

From the IRS: For folks who earn $57,000 or less (and – don’t be surprised – it’s an awful lot of folks — 70% of the nation’s taxpayers!) may use brand-name software and secure e-filing for free. The providers who are participating include H&R Block, TurboTax, Liberty Tax services and others. Start here and […]

Top 10 non-leveraged ETFs over the last year

I saw an article on a financial planning site pointing to the fact that 8 of the top 10 performing ETFs in 2011 were US Government Bond funds.  So I just did a quick double check via Morningstar’s ETF screener, though the screener doesn’t let me pick a specific year – it lets me do […]

Waggoner: What we learned from bonds’ victory Great column from John Waggoner in USA Today. The headline is a reference to the fact that over the last 1yr, 10yr, 20yr and 30ys periods, bonds (long term treasuries, mainly) have had higher total returns (with dividends all reinvested) than large-cap US stocks (mainly the S&P 500). Some takeaways: the selection of stocks […]

Morningstar: How Expense Ratios and Star Ratings Predict Success

Morningstar: How Expense Ratios and Star Ratings Predict Success

Essential reading for any mutual fund investor.  Even Morningstar, whose star ratings are widely watched in the industry, finds and readily admits that *expenses* are a better indicator of future performance.

From the article:

The star rating is a measure of risk- and load-adjusted returns, so naturally I want to know whether the star rating is able to predict future risk- and load-adjusted returns.


and then:

If there’s anything in the whole world of mutual funds that you can take to the bank, it’s that expense ratios help you make a better decision. In every single time period and data point tested, low-cost funds beat high-cost funds.


Expense ratios are strong predictors of performance. In every asset class over every time period, the cheapest quintile produced higher total returns than the most expensive quintile.

and finally:

Investors should make expense ratios a primary test in fund selection. They are still the most dependable predictor of performance. Start by focusing on funds in the cheapest or two cheapest quintiles, and you’ll be on the path to success.

WSJ/Burton Malkiel: Where to Put Your Money in 2012

WSJ/Burton Malkiek: Where to Put Your Money in 2012

Another excellent op-ed piece by Burton Malkiel, author of the classic “A Random Walk Down Wall Street”.

Malkiel makes the following points (summarized – but you should really read the article):

  • Bonds, especially US and Europe, are not positioned to do very well in the future
  • Stocks, especially the US and Emerging Markets are
  • Emerging Markets, in general but especially Brazil and China and even India look good (natural resources, demographics, etc)
  • Single-family houses in the US are less expensive and with ultra-low mortgage rates (see “Bonds” above — a mortgage is the opposite side of buying a bond – it’s borrowing rather than lending!) look good.  (“Housing affordability has never been better.”  Though, of course, that’s contingent on good credit and probably a job.)
  • Costs matter – this was the final paragraph and it’s always worth repeating: “Control the thing you can control — minimize investment costs.  That is especially important in a low-return environment.  Make low-cost index mutual funds or ETFs the core of your portfolio and ensure that any actively-managed investment funds you purchase are low-expense as well.”

How To Build Your Financial Dream Team

How To Build Your Financial Dream Team

A nice article in the WSJ’s “Weekend Investor” column about how to build a team of professionals to help you keep your financial house in order — starting with your financial advisor (with mentions of some orgs like the FPA, NAPFA, CFP Board to help find people, as well as some warnings about how advisors are paid).